Getting a vehicle is practically a necessity for most people nowadays. You can’t commute to work, get groceries or drive your kids to soccer practice without a reliable car. Unfortunately, buying a brand new car is often out of the question for the majority of shoppers, and even used cars can be quite pricey. This is why it’s essential for you to take out a used car loan that has a reasonable rate so that it’s affordable for you to pay off. The loan will provide you the money upfront that you need to purchase the car and then you’ll pay the lender back with interest over the course of about five to seven years.
When to Take Out a Loan
If you have the money to pay for a used car outright, try not to take out a loan for it. The reason for this is due to the fact that you’re not only paying the lender back for the money borrowed, but interest is also included and you’ll wind up paying more for the car than what is was worth. If you can’t afford the car, you need to take out a loan to pay for it. If you have a bad credit score or no credit at all, this will directly affect the types of loans you’re eligible for receiving.
Understanding the Average Rates
The average car rate can range from four percent to a whopping 15 percent, with average APR for a used car loan being around seven percent. The specific lender you choose and your credit score will have an impact on what you pay. For instance, if you have a great credit score, stable financial history and are getting the loan from a reasonable lender, you’ll probably get a lower rate as opposed to someone going with a seedy lender who offers bad credit loans. You will need the lowest rate possible.
Finding a Lender
The key to getting a great rate and a loan you’ll be able to afford is by going with a reliable lender. There are literally thousands of lenders to choose from, so you’ll need to figure out which one accepts people with your credit score and financial background. Once you find a lender, you’ll need to figure out how long you’d like to take to pay off the loan and what you’re willing to shell out each month.
Paying Off the Loan
The average used car loan takes anywhere from three to seven years to pay off. The longer it takes you to pay off the loan, the lower your payments will be each month. You can also sign up for auto payments that reduce the chance that you’ll forget to pay the bill and it becomes past due. Once you take out a loan, it’s important that you pay it off each and every month to prevent your car from being repossessed. Many owners have lost their vehicles due to car loan repossession.